The death of Margaret Thatcher, former UK Prime Minister, calls for an assessment of an iconic legacy, not the marking of the end of an era. For her intellectual and policy legacy is still very evident, whether one likes it or not. We look into a familiar mirror as some of the debt-ridden peripheral countries in the EU espouse privatization to help resolve their sovereign debt and banking crises. What has happened in the world economy in recent years is a story on its own and responsibility cannot be laid at her door. Yet what she implemented in her time was a paradigm shift, with a permanent influence on global economic thinking.

There is no need to agree with all of her radical positions to accept that at the time she strongly reminded the world at large, and the UK in particular, that there were economic fundamentals that countries ignored at their peril. To Thatcher economics was, and still largely is, built up from the logic of choice under conditions of scarcity. In her view, this reality needed to be rediscovered by policy-makers and politicians. Her thinking was definitive, though her style was sometimes divisive.

She applied her view especially to the public sector, believing that the time had arrived to roll-back, after many decades, of what she saw as the excesses of Keynesian thinking reflected in the bloated public sectors of the UK and elsewhere. It also coincided with the evolution of similar thinking in the US under President Ronald Reagan. Their approach was to devise ways and means of reducing the size of the public sector which, as other countries have found, is easier said than done. The Iron Lady’s very tough stance on reducing public spending in the early 1980s was what led her to describe worried Cabinet colleagues who opposed it as ‘wets’.

Thatcher also believed that, given the economic malaise in the UK at the time she came to power in 1979, the power of trade unions needed to be curbed if they were not to constantly bring Britain’s economy to a standstill. This was achieved after several confrontations with organized labour, especially in the mining industry, when the ‘rules of the game’ regarding issues such as picketing and the need for open balloting of decisions to strike were ultimately addressed in new legislation. ‘Social dialogue’ did not come easily to Thatcher.

Thatcher was a great believer in ‘popular capitalism’, entrepreneurship and competition. To give effect to this she encouraged the selling off of local council housing in ways which would encourage private ownership.This was also the motivation behind privatization, so as to promote greater efficiency in the delivery of key public services ranging from electricity to water supply. Much of this was successful but not all of it. In some cases the privatization plans were too rushed and were not necessarily always thoroughly evaluated on a ‘case-by-case’ basis. Nonetheless, these projects became a role model for other parts of the world, especially at a time when Communism was on its way out.

Even Tony Blair’s ‘New Labour’ government in 1997 did not reverse many of Thatcher’s privatization projects but sought to extract from them useful business principles which could be applied to the rest of the UK’s public sector. The Blair government sought to inject limited ‘market principles’ into areas such as the national health service and school education in an effort to improve their efficiency.The fact that Tony Blair, as a Labour Prime Minister, entertained Thatcher at 10 Downing Street shortly after his first election, shows not only the extent to which he saw her as having been a game-changer in her day, but also the degree to which he wanted to be one himself for the ‘new’ Labour Party.

Of course, as with all revolutions in thinking, the pendulum tends to swing back. While it may have been necessary for Thatcher to shock the UK economy out of its decline with radical treatment, inevitably the pendulum would reverse to some extent after she lost office. But it would not revert to its previous position but rather entrench those changes that were now irreversible. Both John Major, Thatcher’s immediate successor as Prime Minister, and subsequently Tony Blair, modified her approach but built on it. Policy coagulated around the centre. The Blair government even gave the Bank of England autonomy, which was more than Thatcher ever contemplated. But thanks to her phrases such as ‘fiscal discipline’ and ‘value-for-money’ for taxpayers irrevocably entered the economic lexicon, both generally and in SA.

For SA the heyday of Thatcher was between 1980 and 1990, when the first serious cracks were appearing in the edifice of apartheid. Just as she was often at odds with her colleagues in the EU, so she was frequently in disagreement with the Commonwealth about economic sanctions against SA. While strongly opposed to apartheid, Thatcher argued that broad economic sanctions would do more harm than good, by hurting those they were supposed to help. It is interesting that in recent years sanctions against countries like Iraq, Iran and Zimbabwe have been targeted against groups and individuals,rather than against the general population.

Thatcher was a firm believer in ‘self-reliance’ and in empowering citizens to stand on their own feet. A cornerstone of our National Development Plan is ‘an active citizenry’. The concerns recently expressed by both President Jacob Zuma and Finance Minister Pravin Gordhan about growing welfare dependency in SA also resonate with her approach to restructuring the UK economy in ways which would transfer people out of welfare into work. There seems no place to hide from the long reach of Thatcher’s thinking.

(Parsons is a Professor at the Graduate Business School at North West University)

Agreed. Competition is the key to successful privatisation. I often worry when you hear calls in the media for the (re-)privatisation of SAA, or even privatisation of Eskom. I don’t like their inefficiencies, but to have them as profit maximising firms is just as scary.

Let’s leave the economic stuff aside for the moment, Thatcher was not a strong opponent of apartheid. Please stop recycling this lie. She was involved, along with Reagan and right-wing US groups, in supporting Inkatha as a way of destabilising South Africa and fighting the ANC by proxy (like the SA government did with Renamo in Mozambique). She considered the ANC terrorists and FW and PW her friends. Why should I pay any attention to the rest of the article if you are airbrushing her failures?

These points are are also being made in the blogospehere and are much appreciated, but we are mainly focussing on an economics obituary since we are an economics blog. And not all of the economists agree about her economics legacy. For more about the politics we’ll have to point you to our political science colleagues.